“One of the dark secrets of the market is we don’t really do much research on Wall Street. I started off on the trading desk. I worked at my job. There were a lot of people who really hadn’t done the work, and what they were saying was very compelling and saleable, but it wasn’t right.”
-Laszlo Birinyi

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

10 Responses to “QOTD: Birinyi on Wall Street research”

Sell-side ‘research’ is about as professional as an analysis of the housing market from a Realtor(TM). Ninety-nine percent of the time, the song remains the same: “BUY NOW, BEFORE PRICES GO UP!’

That’s why market valuations based on ‘forward earnings’ estimates are so laughably useless — the input data is tendentious garbage to begin with.

If Glass-Steagall is ever re-enacted, brokers should be prohibited from engaging in research and offering market advice. There’s a hopeless conflict of interest, and it can’t be fixed except by making research a standalone, hard-dollar product from independent sources that do not offer brokerage services.

As I always tell cold-calling brokers, ‘If you were any good at predicting the market, you’d be a rich money manager, not an order-taking shill. So f*ck off!’

As near as I can tell, Wall Street analysis goes something like this. An analyst calls a CEO, gets his estimates, cuts them by 5 or 10% to ensure an earnings beat and all the silly little investors rush to buy on the “beat” as if it has some signifgance. Good for business, not so much for credibility.

I am an engineer. It must be nice to be in finance or politics where you can simply create alternate universes to live in and speak from. If you are wrong, you just say that you were right and you move on. If something really bad starts to happen, the money printers will step in and solve your problems.

In my engineering world, alternate universes can only exist for short periods before Newtonian physics and other such things come in and take over. The recent earthquake in Turkey is a classic example: a bunch of contractors and regulatros decided that they could exist in an alternate universe that didn’t have earthquakes and therefore the steel and cement required in the building codes was unnecessary. Then the real world intruded and a lot of people lost their buildings and lives.

It appears that in the finance and political world, one can simply declare after the fact that the earthquake never happened or was inconsequential, but whatever it was won’t happen again, and then everything is fine. The stock market skyrocketing yesterday around the world seems to indcate that the major financial subduction fault with volcanoes and earthquakes in the PIIGS has now been determined to not actually exist and therefore everybody can just go back to watching sports.

Say Hello

About Barry Ritholtz

Ritholtz has been observing capital markets with a critical eye for 20 years. With a background in math & sciences and a law school degree, he is not your typical Wall St. persona. He left Law for Finance, working as a trader, researcher and strategist before graduating to asset managementRead More...

Quote of the Day

"The largest Asian central banks have gone on record that they are curbing their purchases of US debt. And they are also diversifying their huge reserves, steadily moving away from the dollar. The risks have simply become too many and too serious." -W. Joseph StroupeEditor, Global Events

Sign Up For My Newsletter

Get subscriber only insights and news delivered by Barry every two weeks.